Voice of Te'o prankster? Couric plays voicemails

NEW YORK (AP) — The person Manti Te'o says was pretending to be his online girlfriend told the Notre Dame linebacker "I love you" in voicemails that were played during his interview with Katie Couric.

Taped earlier this week and broadcast Thursday, the hour-long talk show featured three voicemails that Te'o claims were left for him last year. Te'o said they were from the person he believed to be Lennay Kekua, a woman he had fallen for online but never met face-to-face.

After the first message was played, Te'o said: "It sounds like a girl, doesn't it?"

"It does," Couric responded.

The interview was the All-American's first on camera since his tale of inspired play after the deaths of his grandmother and girlfriend on the same day in September unraveled as a bizarre hoax in an expose by Deadspin.com on Jan. 16.

Te'o's parents appeared with him for part of the interview and backed up his claim that he wasn't involved in the fabrication, saying they, too, had spoken on the phone with a person they believed to be Kekua.

Couric addressed speculation that the tale was concocted by Te'o as a way to cover up his sexual orientation. Asked if he were gay, Te'o said "no" with a laugh. "Far from it. Faaaar from that."

He also said he was "scared" and "didn't know what to do" after receiving a call on Dec. 6 — two days before the Heisman Trophy presentation — from a person who claimed to be his "dead" girlfriend.

The first voicemail, he said, was from what was supposed to be Kekua's first day of chemotherapy for leukemia.

"Hi, I am just letting you know I got here and I'm getting ready for my first session and, um, just want to call you to keep you posted. I miss you. I love you. Bye," the person said.

In the second voicemail, the person was apparently upset by someone else answering Te'o's phone.

The third voicemail was left on Sept. 11, according to Te'o, the day he believed Kekua was released from the hospital and the day before she "died."

"Hey babe, I'm just calling to say goodnight," the person on the voicemail said. "I love you. I know that you're probably doing homework or you're with the boys. ... But I just wanted to say I love you and goodnight and I'll be ok tonight. I'll do my best. Um, yeah, so get your rest and I'll talk to you tomorrow. I love you so much, hon. Sweet dreams."

Couric suggested the person who left those messages might have been Ronaiah Tuisasosopo, a 22-year-old man from California, who Te'o said has apologized to him for pulling the hoax.

"Do you think that could have been a man on the other end of the phone?" she asked.

"Well, it didn't sound like a man," Te'o said. "It sounded like a woman. If he somehow made that voice, that's incredible. That's an incredible talent to do that. Especially every single day."

Tuiasosopo has not spoken publicly since news of the hoax broke. The Associated Press has learned that a home in California where Te'o sent flowers to the Kekua family was once a residence of Tuiasosopo and has been in his family for decades.

Also on Thursday, the woman whose pictures were used in fake online accounts for Kekua said Tuiasosopo confessed to her in a 45-minute phone conversation as the scheme unraveled.

Diane O'Meara spoke with The Associated Press in a telephone interview. She said Tuiasosopo told her he'd been "stalking" her Facebook profile for five years and stealing photos.

O'Meara's attorney, Jim Artiano, said they had not decided on whether to take any legal action.

The 23-year-old O'Meara, of Long Beach, Calif., said she knew Tuiasosopo from high school and he contacted her through Facebook on Dec. 16. She said that, over the next three weeks, Tuiasosopo got in touch with her several times, attempting to get photos and video of O'Meara. She said he made up a story about wanting them to help cheer up a cousin who was injured in a car crash.

O'Meara learned her identity had been stolen on Jan. 13 when she was contacted by Deadspin.com.

The next day she got in touch with Tuiasosopo.

"When I contacted Ronaiah I got a very bizarre vibe from him, he became very nervous, he wasn't asking the questions I expected. He was asking 'Who contacted you? What did they say?'" O'Meara said.

Later that day, he confessed, O'Meara said. She said she asked Tuiasosopo why he didn't simply stop the hoax.

"He told me he wanted to end the relationship," O'Meara said. "He said he wanted to stop the relationship between Lennay and Manti, but Manti didn't want Lennay to break up with him ... He said he tried to stop the game many times."

When news of the hoax broke a few days later, O'Meara said she received a text from Tuiasosopo asking her to call him as soon as possible. O'Meara said she didn't respond.

___

Associated Press writer Tami Abdollah contributed to this report from Los Angeles.

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HCA Must Pay Kansas City Foundation $162 Million

HCA, the nation’s largest profit-making hospital chain, was ordered on Thursday to pay $162 million after a judge in Missouri ruled that it had failed to abide by an agreement to make improvements to dilapidated hospitals that it bought in the Kansas City area several years ago.

The judge also ordered a court-appointed accountant to determine whether HCA had actually provided the levels of charitable care that it agreed to at the time.

The ruling came in response to a suit filed in 2009 by a community foundation that was created when HCA acquired the hospitals. Among other things, the foundation was responsible for ensuring that HCA met the obligations outlined in the deal.

The dispute in Kansas City is the second time in recent years that HCA has come under legal fire from officials in communities that sold troubled nonprofit community hospitals to HCA.

In another dispute in New Hampshire in 2011, a judge ruled in HCA’s favor, deciding that Portsmouth Regional Hospital would remain part of HCA after community leaders tried to regain control. During testimony in a 2011 trial, a former hospital official claimed he had difficulties getting HCA to pay for what he and others described as critical equipment and facility upgrades.

In an e-mailed statement, a spokesman for HCA said the company was disappointed in the court’s ruling and intended to appeal. He also added that the two cases were “rare exceptions” and that the company had enjoyed positive relationships with communities across the country.

The suit is among several problems for HCA. The company disclosed last year, for example, that the United States attorney’s office in Miami had subpoenaed documents as part of an inquiry to determine whether unnecessary cardiology procedures had been performed at HCA hospitals in Florida and elsewhere. At stake in that case is whether HCA inappropriately billed Medicare and private insurers for the procedures. HCA has denied any wrongdoing.

Financially, Thursday’s judgment is a slap on the wrist for HCA, which posted net income of $360 million in just the third quarter of last year. But the ruling may reverberate beyond HCA as communities across the country put their troubled nonprofit hospitals up for sale.

In many cases, the buyers with the deepest pockets have been profit-making hospital chains that want to convert the community hospitals to profit status, typically agreeing to spend money to fix them and to maintain certain levels of charitable care in the community.

In 2011, for instance, Vanguard Health Systems, which went public that year and has as its largest shareholder the private equity firm Blackstone Group, bought eight hospitals in Detroit. As part of that deal, Vanguard Health agreed to spend $850 million over five years to fix and maintain the hospitals.

The trouble in the Kansas City area began a year after HCA acquired a dozen hospitals from Health Midwest in 2003 for $1.125 billion. As part of the deal, HCA agreed to make $300 million in capital improvements in the first two years and an additional $150 million in the following three. The hospital chain also agreed to maintain the levels of care that had been provided to low-income individuals and families in the area for 10 years.

But when the members of the Health Care Foundation of Greater Kansas City, a nonprofit created from the proceeds of the sale of the hospital, received their first report from HCA in 2004 they discovered the hospital was already way behind.

Of the $300 million it was supposed to spend in the first two years, its own documents showed it had spent only about $50 million, according to Mark G. Flaherty, one of the founding members of the foundation and its general counsel.

HCA’s reports to the foundation also indicated that the level of charitable care it provided at the system’s large inner-city hospital had fallen while charitable care provided at the more affluent suburban hospital had risen sharply, Mr. Flaherty said.

“That was a big red flag to us,” he said.

After repeatedly asking HCA executives for explanations but receiving none, the foundation sued HCA in 2009. The case went to trial for several weeks in 2011.

HCA argued in the trial that it had met its obligation to spend money on hospital facilities by building two new hospitals at a cost of hundreds of millions of dollars, rather than repairing older facilities. But Judge John Torrence of Jackson County Circuit Court ruled that the agreement called for improvements to existing hospitals.

He said HCA still owed $162 million of the $300 million it had agreed to spend between 2003 and 2005. He then named a court-appointed forensic accountant to determine whether HCA had met its other capital commitments and whether it provided the charitable care it had said it would.

HCA’s own written statements claimed “differing amounts,” the judge wrote in his ruling. One HCA report said it provided $48 million in charitable care to the area in 2009 while another report on its Web site said it provided more than $87 million. The annual report to the foundation claimed it provided $185 million in uncompensated and charity care that year, the judge wrote.

During the trial, when asked about the widely differing numbers, the president of HCA’s Midwest division and other HCA executives had no explanation.

The money will be paid to the foundation, which will use it to create grants to provide care for uninsured or underinsured families in the area. It is unclear whether the spending on improvements will occur.

Depending on what the court-appointed accountant discovers, HCA may owe even more money, said Paul Seyferth of Seyferth Blumenthal & Harris, which represents the foundation.

“We think they’re going to have a tremendously difficult time convincing anybody that they spent what they claim they spent,” Mr. Seyferth said.

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Storm-Damaged Homes Mean Lower Property Tax Revenues in New York Region

Localities across the New York region, already reeling from the cost of cleaning up from Hurricane Sandy, are confronting the prospect of an even bigger blow to their finances: a precipitous decline in property tax revenues.

The storm damaged tens of billions of dollars’ worth of real estate, especially in coastal areas of Long Island and New Jersey. As a result, localities can no longer expect to reap the same taxes from properties that have lost much of their value — in some cases, permanently.

Without new revenues, state and local officials and Wall Street analysts said, these areas may have to make deep cuts in spending on schools, police and fire departments and other services. They also may be hard-pressed to finance rebuilding.

“Absolutely, this is going to be devastating for several years,” said Ester Bivona, former president of the New York State Receivers and Collectors Association, which represents local tax officials.

The Division of Local Government Services in New Jersey estimated this month that more than a dozen municipalities in the state could lose at least 10 percent of their tax bases. About another 10 face a drop between 5 percent and 10 percent, state and local officials said.

Among the worst hit is Toms River, one of New Jersey’s largest municipalities, with 90,000 people. It recently warned Wall Street that property tax receipts could drop 10 percent to 15 percent, according to its financial disclosure documents.

Down the coast, the tiny borough of Tuckerton lost close to 20 percent of its property tax base. In Sea Bright, nearly half the homes are uninhabitable.

The situation is similar on Long Island, according to interviews with officials there.

The village of Freeport in Nassau County expects that many of its 15,000 homeowners will qualify for reductions in property tax bills, erasing at least 5 percent of property tax revenues and probably far more.

Experts said the looming revenue crisis for localities in the region underscores how natural disasters can have a profound effect long after the debris is gone.

If localities try to raise overall tax rates to make up for looming deficits, they may touch off a backlash from homeowners with undamaged properties.

“My thing is to encourage property owners to not seek reassessments because you’re going to pay on one end or the other,” said Andrew Hardwick, Freeport’s mayor. “If too many people seek reassessment and are successful with it, that means, how do you pay the bills on the other end? You raise the taxes again? It doesn’t make sense.”

Some localities, like Long Beach, on Long Island, had shaky finances before the storm and are now in deeper trouble, according to local budget records. But many others had been on solid financial ground.

Two major bond-rating agencies, Moody’s Investors Service and Standard & Poor’s, have expressed concerns in recent weeks about the fiscal stability of numerous municipalities in the region.

New York City and county governments in New York are far less reliant on property taxes than localities, so they are expected to have an easier time weathering a drop in the value of the tax base caused by storm damage. The city, for example, has its own income and business taxes.

What’s more, the city and county governments in both states have a much broader property tax base than small localities.

The $50.7 billion Hurricane Sandy relief bill approved this month by the House of Representatives provides up to $300 million in low-interest loans for localities facing shortfalls. The Senate has supported a similar provision in its own relief package.

But some local officials said such financing was not nearly enough. States themselves have not yet sent aid, and senior state officials said they were not inclined to do so until federal money was exhausted.

“It’s a pretty inescapable conclusion that there will be an impact on the tax base,” said Michael Drewniak, chief spokesman for Gov. Chris Christie of New Jersey.

“In many instances, we had homes completely wiped out or severely damaged to the point they were rendered uninhabitable,” Mr. Drewniak said. “That left behind rebuildable land but, in the meantime, no ‘improvements’ to tax. In other cases, people may find it cost prohibitive to rebuild at all, depending on their individual circumstances.”

It could be a year or two before the aftereffects are fully understood, given that localities will have to assess damaged properties before lowering property taxes on them.

Griff Palmer contributed reporting.

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IHT Rendezvous: IHT Quick Read: Jan. 24

NEWS In one of her final appearances as secretary of state, Hillary Rodham Clinton on Wednesday vigorously defended her handling of last September’s attack on the United States diplomatic compound in Benghazi, Libya, which killed four Americans and prompted a scathing review of State Department procedures. Michael R. Gordon reports from Washington.

North Korea vowed on Thursday to launch more long-range rockets and conduct its third nuclear test, ratcheting up tensions following the United Nations Security Council’s decision to tighten sanctions against the country for launching a rocket last month. Choe Sang-Hun reports from Seoul.

Prime Minister David Cameron of Britain has added to Europe’s malaise, vowing to reduce British entanglement with the European Union—or allow his people to vote in a referendum to leave the bloc altogether. Andrew Higgins reports from Brussels.

Defense Secretary Leon E. Panetta is lifting the U.S. military’s official ban on women in combat, which will open up hundreds of thousands of additional front-line jobs to them, senior defense officials said Wednesday. Elisabeth Bumiller and Thom Shanker report from Washington.

At the most recent count, there were 212,000 refugees in Lebanon, registered or awaiting registration with the United Nations refugee agency. A year ago, the agency had registered 5,000. The increase mirrors the intensification of a conflict across the border in Syria that the United Nations says has now killed 60,000. Josh Wood reports from Al-Minya, Lebanon.

Jamie Dimon, the chief executive of JPMorgan Chase, apologized again for the bank’s recent $6 billion trading loss, this time in front of an audience that included the elite of the financial world. But in keeping with his confident demeanor, it was a diet portion of humble pie. Jack Ewing reports from Davos, Switzerland.

ARTS Nearly 212,000 oil paintings in Britain have been photographed and put online in a comprehensive project designed to make the country a cultural pioneer of the digital age. Stephen Castle reports from London.

FASHION The garden in all its summer enchantment has blossomed as the big theme of the Paris couture season. Suzy Menkes reviews from Paris.

SPORTS Li Na, one of China’s biggest sports stars, played one of the best big matches of her career to defeat Maria Sharapova, 6-2, 6-2 and reach the Australian Open final. Christopher Clarey reports from Melbourne, Australia.

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Google Wants to Own the Airwaves, Now

As if Google‘s launching a free Wi-Fi network in New York City earlier this month wasn’t curious enough, now the search giant is asking the Federal Communications Commission for a license to create an “experimental radio service.” What’s an experimental radio service, you ask? Well, Google won’t say exactly what its doing with the air above its Mountain View, California headquarters, but the details of the FCC application suggest it’s trying to build its own proprietary wireless network.

RELATED: Who’s Winning the Facebook-Google Tech War

Oh, so this must have something to do with Google Fiber and Google‘s becoming an Internet service provider, offering insanely fast Internet, right? Again, not exactly. “Google‘s small-scale wireless network would use frequencies that wouldn’t be compatible with nearly any of the consumer mobile devices that exist today, such as Apple’s iPad or iPhone or most devices powered by Google‘s Android operating system,” explain The Wall Street Journal‘s Amir Efrati and Anton Troianovski. “The network would only provide coverage for devices built to access certain frequencies, from 2524 to 2625 megahertz.” However, networks using those frequencies are under construction in Asia, just waiting for devices that support them. And last year, Google purchased Motorola Mobility, a mobile phone manufacturer that could ostensibly manufacture such devices. This is starting to sound sort of shady.

RELATED: You Were Right to Delete Your Google History

While it’s too soon to understand the extent of the company’s plans, it certainly looks like Google actually wants to own the airwaves now. Could we see a Google phone that works on a custom built Wi-Fi network, one that nobody else can use? It’s very possible. For now, Google‘s official answer to that line of questioning is that the company experiments all the time with all kinds of things. But according to Steven Crowley, a wireless engineer who first spotted the FCC application, ”The only reason to use these frequencies is if you have business designs on some mobile service.” 

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Defending champ Azarenka into final against Li

MELBOURNE, Australia (AP) — Victoria Azarenka overcame some anxiety, a sore left knee, and a slew of frustrating forehand errors before fending off American teenager Sloane Stephens to reach the Australian Open final against Li Na.

For the second time in two days, 19-year-old Stephens sat patiently in a courtside chair late in the second set while an experienced, older player took a medical timeout.

On Thursday, the top-seeded Azarenka asked for a medical timeout after wasting five match points with a sequence of forehand errors, but returned to quickly finish off a 6-1, 6-4 win on her sixth match point. The outcome was different on Wednesday, when Stephens rallied from a set and a break down to beat an injured Serena Williams in three sets.

After dropping serve in the ninth game of the second set, Azarenka went to the locker room for treatment — the tournament confirmed later it was for left knee and rib injuries — and then returned to break the 29th-seeded Stephens' serve to finish off the match.

"Well I almost did the choke of the year right now at 5-3 having so many chances I couldn't close it out," Azarenka said in an on-court TV interview. "I just felt a little bit overwhelmed. I realized I'm one step away from the final and nerves got into me for sure."

The crowd had tried to get Stephens back into the match in the second set. Fans yelled encouragement after almost every point and a few in the crowd heckled Azarenka by mocking the noise she makes when she hits the ball.

Azarenka started to lose her composure when she hit a forehand way beyond the baseline on her third match point, her hooting sound elevating to a louder, high-pitched shriek.

After Stephens saved the match points, the crowd gave her a huge round of applause and a few people jumped out of their seats. Azarenka got a tepid applause after clinching the match.

The 23-year-old Azarenka later said she'd had difficulty breathing.

"I couldn't breathe. I had chest pains," she said. "It was like I was getting a heart attack.

"After that it wasn't my best, but it's important to overcome this little bit of a struggle and win the match."

Stephens said the timing of the medical break didn't affect the match.

"It's happened before. Last match, match before, I've had people going for medical breaks, going to the bathroom," she said. "Didn't affect me. Just another something else that happens."

The temperature hit 97 degrees during the second women's semifinal, slightly hotter than it had been when Li Na beat No. 2-ranked Maria Sharapova 6-2, 6-2 to reach the Australian Open final for the second time in three years.

Sharapova was the heavy favorite after conceding only nine games in her first five matches, a record at the Australian Open.

But the semifinal started badly for the 25-year-old Russian, serving double-faults to lose the first two points and conceding a break in the first game.

Li was the first Chinese player to reach a Grand Slam final when she lost to Kim Clijsters at Melbourne Park in 2011. She had her breakthrough a few months later when she won the French Open, beating Sharapova in the semifinals along the way.

The crowd got behind Li early in the match, yelling "Come on, Li Na!" and others yelling "Jia You!" which is "Come on" in Chinese. After she broke Sharapova to take a 5-2 lead, the Chinese fans in the crowd shook Chinese flags and shouted again, "Jia You!"

"I don't know what happened (but) I always play well here, so thanks guys," said Li, who was playing her third Australian Open semifinal in four years. "I just came to the court feeling like, 'OK, just do it.'"

The heat and the speed of the court surface suited Li's game.

She broke Sharapova in the third game of the second set and served an ace to move within a point of a 4-2 lead, but lost the next three points to give her opponent a break opportunity.

Two big second serves took Sharapova by surprise, and Li fended off the challenge.

Li's coach, Carlos Rodriguez — who worked with retired seven-time major winner Justine Henin — pumped his fist over his heart after Li won the game.

Sharapova had control in her next service game, but Li scrambled from side to side and pushed the reigning French Open champion to go for the lines, getting a series of unforced errors and another break.

The sixth-seeded Li has been working since August with Rodriguez, and credits him with reviving her career with a renewed emphasis on condition.

"I'm happy. I know I have a tough coach, a tough physio," Li said, looking across to the stands and adding: "You don't need to push me anymore. I will push myself."

Sharapova, who lost the 2012 Australian final in straight sets to Azarenka, admitted it was hard to get into the match against Li.

"She was certainly much more aggressive than I was, dictating the play. I was always on the defense," said Sharapova, who could have gained the No. 1 ranking by reaching the Australian final. "When I had my opportunities and break points in games that went to deuce, I don't think any of them really went my way."

The composition of the women's semifinals was somewhat unexpected.

Stephens produced the upset of the tournament to advance to a Grand Slam semifinal for the first time with her 3-6, 7-5, 6-4 victory over 15-time major winner Serena Williams on Wednesday. Williams, who had been bidding for a third consecutive Grand Slam title, hurt her back in the second set and, after leading by a set and a break, ended a 20-match winning streak.

While there were surprises in the composition of the women's last four, the makeup of the men's semifinals was as expected.

Top-ranked Novak Djokovic will continue his bid for a third consecutive Australian title when he takes on No. 4 David Ferrer on Thursday. No. 2 Roger Federer and No. 3 Andy Murray will meet Friday.

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Well: Long Term Effects on Life Expectancy From Smoking

It is often said that smoking takes years off your life, and now a new study shows just how many: Longtime smokers can expect to lose about 10 years of life expectancy.

But amid those grim findings was some good news for former smokers. Those who quit before they turn 35 can gain most if not all of that decade back, and even those who wait until middle age to kick the habit can add about five years back to their life expectancies.

“There’s the old saw that everyone knows smoking is bad for you,” said Dr. Tim McAfee of the Centers for Disease Control and Prevention. “But this paints a much more dramatic picture of the horror of smoking. These are real people that are getting 10 years of life expectancy hacked off — and that’s just on average.”

The findings were part of research, published on Wednesday in The New England Journal of Medicine, that looked at government data on more than 200,000 Americans who were followed starting in 1997. Similar studies that were done in the 1980s and the decades prior had allowed scientists to predict the impact of smoking on mortality. But since then many population trends have changed, and it was unclear whether smokers today fared differently from smokers decades ago.

Since the 1960s, the prevalence of smoking over all has declined, falling from about 40 percent to 20 percent. Today more than half of people that ever smoked have quit, allowing researchers to compare the effects of stopping at various ages.

Modern cigarettes contain less tar and medical advances have cut the rates of death from vascular disease drastically. But have smokers benefited from these advances?

Women in the 1960s, ’70s and ’80s had lower rates of mortality from smoking than men. But it was largely unknown whether this was a biological difference or merely a matter of different habits: earlier generations of women smoked fewer cigarettes and tended to take up smoking at a later age than men.

Now that smoking habits among women today are similar to those of men, would mortality rates be the same as well?

“There was a big gap in our knowledge,” said Dr. McAfee, an author of the study and the director of the C.D.C.’s Office on Smoking and Public Health.

The new research showed that in fact women are no more protected from the consequences of smoking than men. The female smokers in the study represented the first generation of American women that generally began smoking early in life and continued the habit for decades, and the impact on life span was clear. The risk of death from smoking for these women was 50 percent higher than the risk reported for women in similar studies carried out in the 1980s.

“This sort of puts the nail in the coffin around the idea that women might somehow be different or that they suffer fewer effects of smoking,” Dr. McAfee said.

It also showed that differences between smokers and the population in general are becoming more and more stark. Over the last 20 years, advances in medicine and public health have improved life expectancy for the general public, but smokers have not benefited in the same way.

“If anything, this is accentuating the difference between being a smoker and a nonsmoker,” Dr. McAfee said.

The researchers had information about the participants’ smoking histories and other details about their health and backgrounds, including diet, alcohol consumption, education levels and weight and body fat. Using records from the National Death Index, they calculated their mortality rates over time.

People who had smoked fewer than 100 cigarettes in their lifetimes were not classified as smokers. Those who had smoked at least 100 cigarettes but had not had one within five years of the time the data was collected were classified as former smokers.

Not surprisingly, the study showed that the earlier a person quit smoking, the greater the impact. People who quit between 25 and 34 years of age gained about 10 years of life compared to those who continued to smoke. But there were benefits at many ages. People who quit between 35 and 44 gained about nine years, and those who stopped between 45 and 59 gained about four to six years of life expectancy.

From a public health perspective, those numbers are striking, particularly when juxtaposed with preventive measures like blood pressure screenings, colorectal screenings and mammography, the effects of which on life expectancy are more often viewed in terms of days or months, Dr. McAfee said.

“These things are very important, but the size of the benefit pales in comparison to what you can get from stopping smoking,” he said. “The notion that you could add 10 years to your life by something as straightforward as quitting smoking is just mind boggling.”

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Media Decoder Blog: A Resurgent Netflix Beats Projections, Even Its Own

9:12 p.m. | Updated For all those who have doubted its business acumen, Netflix had a resounding answer on Wednesday: 27.15 million.

That’s the number of American homes that were subscribers to the streaming service by the end of 2012, beating the company’s own projections for the fourth quarter after a couple of quarters of underwhelming results.

Netflix’s growth spurt in streaming — up by 2.05 million customers in the United States, from 25.1 million in the third quarter — was its biggest in nearly three years, and helped the company report net income of $7.9 million, surprising many analysts who had predicted a loss.

The results reflected just how far Netflix has come since the turbulence of mid-2011, when its botched execution of a new pricing plan for its services — streaming and DVDs by mail — resulted in an online flogging by angry customers. Investors battered its stock price, sending it from a high of around $300 in 2011 to as low as $53 last year.

“It’s risen from the ashes,” said Barton Crockett, a senior analyst at Lazard Capital Markets. “A lot of investors have been very skeptical that Netflix will work. With this earnings report, they’re making a strong argument that the business is real, that it will work.”

Investors, cheered by the results, sent Netflix shares soaring more than 35 percent in after-hours trading Wednesday. The stock had ended regular trading at $103.26.

Netflix’s fourth-quarter success was a convenient reminder to the entertainment and technology industries that consumers increasingly want on-demand access to television shows and movies. Streaming services by Amazon, Hulu and Redbox are all competing on the same playing field, but for now Netflix remains the biggest such service, and thus a pioneer for all the others.

“Our growth and our competitors’ growth shows just how large the opportunity is for Internet TV, where people get to control their viewing experience,” Netflix’s chief executive, Reed Hastings, said in a telephone interview Wednesday evening.

Questions persist, though, about whether Netflix will be able to attract enough subscribers to keep paying its ever-rising bills to content providers, which total billions of dollars in the years to come. The company said on Wednesday that it might take on more debt to finance more original programs, the first of which, the political thriller “House of Cards,” will have its premiere on the service on Feb. 1. Netflix committed about $100 million to make two seasons of “House of Cards,” one of five original programs scheduled to come out on the service this year.

“The virtuous cycle for us is to gain more subscribers, get more content, gain more subscribers, get more content,” Mr. Hastings said in an earnings conference call.

The company’s $7.9 million profit for the quarter represented 13 cents a share, surprising analysts who had expected a loss of 12 cents a share. The company said revenue of $945 million, up from $875 million in the quarter in 2011, was driven in part by holiday sales of new tablets and television sets.

Netflix added nearly two million new subscribers in other countries, though it continued to lose money overseas, as expected, and said it would slow its international expansion plans in the first part of this year.

The “flix” in Netflix, its largely forgotten DVD-by-mail business, fared a bit better than the company had projected, posting a loss of just 380,000 subscribers in the quarter, to 8.22 million. The losses have slowed for four consecutive quarters, indicating that the homes that still want DVDs really want DVDs.

On the streaming side, Netflix’s retention rate improved in the fourth quarter, suggesting growing customer satisfaction.

Asked whether the company’s reputation had fully recovered after its missteps in 2011, Mr. Hastings said, “We’re on probation at this point, but we’re not out of jail.”

He has emphasized subscriber happiness, even going so far as to say on Wednesday that “we really want to make it easy to quit” Netflix. If the exit door is well marked, he asserted, subscribers will be more likely to come back.

The hope is that original programs like “House of Cards” and “Arrested Development” will lure both old and new subscribers to the service. Those programs, plus the film output deal with the Walt Disney Company announced in December, affirm that Netflix cares more and more about being a gallery — with showy pieces that cannot be seen anywhere else — and less about being a library of every film and TV show ever made.

“They’re morphing into something that people understand,” said Mr. Crockett of Lazard Capital.

Mr. Hastings said this had been happening for years, but that it was becoming more apparent now to consumers and investors.

Mr. Hastings’s letter to investors brought up the elephant in the room, the activist investor Carl C. Icahn, who acquired nearly 10 percent of the company’s stock last October. Mr. Icahn, known for his campaigns for corporate sales and revampings, stated then that Netflix “may hold significant strategic value for a variety of significantly larger companies.”

Netflix subsequently put into place a shareholder rights plan, known as a poison pill, to protect itself against a forced sale by Mr. Icahn.

The company said on Wednesday, “We have no further news about his intentions, but have had constructive conversations with him about building a more valuable company.”

Factoring in the stock’s 30 percent rise since November and the after-hours action on Wednesday, Mr. Icahn’s stake has now more than doubled in value, to more than $700 million from roughly $320 million.

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Cameron Promises Britons a Vote on E.U. Membership

LONDON — Prime Minister David Cameron promised Britons a far-reaching referendum on membership in the European Union in a long-awaited speech on Wednesday whose implications have alarmed the Obama administration.

The projected vote will be held only if his Conservative Party wins the election scheduled for 2015, he told an audience in London, and the ballot will take place in or before 2018.

Mr. Cameron had initially planned to deliver the address in the Netherlands last Friday but postponed it because of the hostage crisis in Algeria.

The speech was a defining moment in Mr. Cameron’s political career, reflecting a belief that, by wresting some powers back from the E.U., he can win the support of a grudging British public which has long been ambivalent — or actively hostile — toward the idea of European integration.

“I never want us to haul up the drawbridge and retreat from the world,” he said. “I am not an isolationist.” But he said Britons had a particular view of Europe. “We can no more change this sensibility than drain the English Channel,” he said.

The projected referendum is also a gamble since, if Britons chose to leave the union — a course Mr. Cameron says he opposes — they would be casting aside an engagement which has been a fundamental part of government policy here for four decades. A British exit would also mean the departure from the bloc of a major economic and banking power, placing new obstacles between British businesses and their main trading partners across the English Channel.

Speaking in London early on Wednesday, Mr. Cameron declared: “It is time for the British people to have their say. It is time to settle this European question in British politics.”

“I say to the British people: this will be your decision. And when that choice comes, you will have an important choice to make about our country’s destiny.”

Mr. Cameron said public disillusionment with the European Union in Britain was at an “all-time high” in Britain, and “democratic consent” for membership was “wafer-thin.”.

He ruled out an immediate ballot, saying that the turmoil within the 17-nation zone which uses the euro single currency, of which Britain is not a member, meant that the broader European Union was heading for sweeping reforms which his government wanted to influence.

A referendum before those changes are made, he said, would present an “entirely false choice” with the euro zone in crisis and the shape of the European Union’s future unresolved.

In his speech, Mr. Cameron said he will seek a mandate at the 2015 election for a Conservative government to negotiate a new relationship with the European Union.

“And when we have negotiated that new settlement, we will give the British people a referendum with a very simple in-or-out choice: to stay in the E.U. on these new terms, or come out altogether. It will be an in-out referendum,” he said.

Mr. Cameron added that he will complete the negotiations and hold this referendum within the first half of his next term, if he wins one, suggesting that the vote would take place in 2017 or 2018.

Mr. Cameron had been under mounting pressure from his Conservative Party to make the announcement. Quite apart from an instinctive and historical aversion to closer European integration among many of them, Conservative lawmakers are also concerned about a potential electoral threat from insurgent euroskpeticsin the U.K. Independence Party. The United States has been unusually public in its insistence that Britain, a close ally, stay in the union. Last week, a White House spokesman quoted President Obama as telling Mr. Cameron by telephone that “the United States values a strong U.K. in a strong European Union, which makes critical contributions to peace, prosperity and security in Europe and around the world.”

On Wednesday, Mr. Cameron noted “a gap between the E.U. and its citizens which has grown dramatically in recent years and which represents a lack of democratic accountability and consent that is — yes — felt particularly acutely in Britain.”

“If we don’t address these challenges, the danger is that Europe will fail and the British people will drift toward the exit. I do not want that to happen. I want the European Union to be a success, and I want a relationship between Britain and the E.U. that keeps us in it.”

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FTC study taking aim at online marketing of booze and kids

LOS ANGELES (Reuters) – The Federal Trade Commission (FTC) plans this summer to recommend ways that the alcoholic beverage industry can better protect underage viewers from seeing its advertisements online.

Distillers, brewers and wineries pour millions of dollars into brand promotion on Twitter, Facebook and other social media, and industry critics contend they are not doing enough to prevent young consumers from receiving these messages.

“We’re doing a deep dive on how they’re using the Internet and social media,” said Janet Evans, a lawyer with the FTC, which is conducting a year-long study due to be released by early summer. “We’re focusing on underage exposure.”

She would not elaborate on any potential recommendations that might come out of the study, which began in April 2012.

The FTC is reviewing data from 14 big producers, Evans said, including Beam Inc, the maker of Jim Beam, Diageo Plc, home to Johnnie Walker, and Constellation Brands Inc, which makes Robert Mondavi and Ravenswood wines.

The FTC report “is something we take seriously and place at high priority,” said Karena Breslin, director for digital marketing at Constellation.

The FTC has made two requests for information since the study began, she said.

The regulatory agency has not said it intends to impose restrictions on liquor company social media advertising but it can make recommendations to the industry.

The FTC is empowered to file suit to ensure consumers are protected from deceptive marketing practices, Evans said, but she stressed that studies of this nature are meant to promote better self-regulation, not provide a basis for a case.

Executives say alcohol makers and distributors voluntarily adhere to the same industry-set standard for marketing to underage viewers on social media sites that the industry set for its ads on TV and other medium. That requires that at least 71.6 percent of an audience consists of adults 21 and older.

“No one in their right mind would want to advertise to people who can’t legally buy their product,” said Frank Coleman, senior vice president for Distilled Spirits Council of the United States (DISCUS), the trade group that sets the industry’s advertising codes.

In June 2011, DISCUS revised its code upwards to 71.6 percent from 70 percent, after the FTC recommended it review the standard to better reflect U.S. Census population data.

Industry critics, including David Jernigen, director of the Center on Alcohol Marketing and Youth at Johns Hopkins University, and Sarah Mart, research director of the advocacy group Alcohol Justice, contend the industry didn’t go far enough and should raise the standard further.

Jernigen says it needs to be at least 85 percent to effectively protect youth, so there would be no more than 15 percent exposure to the underage drinking population.

“The industry says its self-regulating but it’s ineffective and social media opens up a whole new set of problems because their ads are everywhere,” said Sarah Mart, research director for the San Rafael, Calif.-based group Alcohol Justice.

The industry group’s Coleman said the group now requires members to install age-checking tools via instant-messaging as a gateway to Twitter feeds and other branded Web platforms that ask the user for a birth date before admitting them.

In the first nine months of 2012, beer, wine and spirits manufacturers’ spent an estimated $ 35 million for paid Web display advertising, but industry executives estimate many millions more were spent on Web site creation, video production for platforms like Google’s YouTube and social media marketing efforts.

“We’ve significantly adjusted more money to digital for online video, Web sites, Facebook and Twitter content,” said Kevin George, global chief marketing officer for Jim Beam, which he says spends 30 percent of its media spend for online outlets, up from 10 percent in 2008.

Many companies are expanding their digital staff. Wine maker Constellation hired Breslin three years ago to initiate digital marketing and now has a team of five reporting to her.

Many alcoholic beverage companies flocked to Facebook because it requires users to post their birth dates when signing up. Last year Twitter partnered with Buddy Media to offer a more effective screening tool that sends a direct message to fans who click on a brand. The message sends the fan a link to a site that asks for date of birth, which has allowed Twitter to grab some more of the sector marketing. Salesforce.com bought Buddy Media last June, which is now folding the platform into its marketing cloud portfolio.

Health advocates and industry critics are crying foul. “Facebook and other interactive platforms are poorly monitored and not well age protected,” said Jernigen of Johns Hopkins University. “Anyone can say they’re 21 and click yes.”

(Reporting By Susan Zeidler; Editing by Ron Grover and Alden Bentley)

Internet News Headlines – Yahoo! News

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